you. to recognize the chairwoman after you summarize your testimony, if that is ok with you, because she has another committee that she needs to chair. the floor is yours.

>> thank you, chairman, ranking members, and congresswoman. i appreciate this opportunity to present the president's fiscal year 2012 budget for the food and drug administration to discuss our priorities for the coming year. this year and comes at a critical moment for our country and for our agency. we must be prepared to meet and capture the scientific challenges and global realities of our modern world, and the stakes for patience, consumers, our economy, and our global economic competitiveness have never been higher. we are charged with an extremely significant task to promote and help the help of the american people, including insuring the safety, effectiveness, and wholesomeness of products that the american people rely on in fundamental and sometimes life- saving waste. drugs, vaccines, medical devices, our nation's food supply, and more. it also includes working

practically to foster the scientific innovation that will lead to tomorrow's new breakthrough products. both roles are essential to delivering to the american people, and both roles impact our economy by encouraging consumer confidence, growing key industries, and creating jobs. thanks to the support of the subcommittee, we have been able to see tangible evidence of that impact over the past year. this year we approved dozens of new drugs, vaccines for seasonal and pandemic flu, and medical devices for hearing and vision loss, severe asthma, and to perform three-dimensional mammography screening. we traced foodborne illness outbreaks, which lost a new system to identify 100 safety problems in its for seven months of operation. we cooperated with the national oceanic and atmospheric administration to perform tests to assure seafood safety and reopen the gulf coast fisheries

after the deepwater horizon of oil spill. that is just a snapshot of what we have done the past year. the fda is charged with enormous and unique set of tasks. as was mentioned, if we don't do our job and do it completely, there is no other agency or entity out there to back stopped us. that is why i'm here to ask for your support of the fiscal year 2012 budget for the fda. that includes $4.4 billion and identifies four priority initiatives -- transforming food safety and nutrition, advancing medical countermeasures, protecting patients, and fostering fda regulatory science and innovation. compared with fiscal year 2010, the fiscal year 2012 budget represents an increase of $1.1 billion, $382 million in budget

authority, and $694 million in user fees, which includes 60 million with three new user fees the fda is proposing. in addition, to contribute to deficit reduction, we will undertake $30 million in contract and administrative savings across the agency. these four initiatives are critical to our mission to protecting the public's health and also represent important opportunities for our food and medical product industries to grow and strengthen our economy. they will provide great return on investment, and for products, people, and most importantly for the public health. but me explain how. first, transforming safety and a trustee -- safety and nutrition initiatives builds a stronger, more reliable food safety system that will protect american consumers. we will use these resources to aggressively implement the food

safety modernization act that congress passed in december. this landmark legislation provides fta with the tools established to prevention focused food safety system, of placing the prime responsibility for prevention on the food producers and processors and leveraging the valuable worked of fda's state and local partners. we'll also make sure that american families have the information they need to make more healthful food choices for menu and vending machine labeling. for the advancing medical countermeasures initiative, the fda proposes $70 million. it includes drugs, vaccines, diagnostic tests, and medical equipment needed to detect and respond to the leopard -- to deliberate threats, as well as emerging infectious disease threats. all of these threaten the lives and safety of the american people. this investment will help accelerate the development of countermeasures that we truly

need to meet critical national- security and public health needs. third, protecting patients. this initiative for which we're proposing an increase of $123.6 million will allow the fda to provide date pathway for biologically similar products, which could provide a substantial savings for the private industry and government. this enhances the safety of the increasingly complex drugs, medical devices, and biological. at fourth, the regulatory sites and facilities initiative contains an increase of $48.7 million to strengthen the core capacity that support all elements of the fda's mission and will enable us to truly streamline and modernize regulation by applying the best possible science, especially as we address more advanced therapies, complex devices, and

emerging technologies. it will also allow the fda to outfit and occupy the center for biological and center for drugs biodefense laboratory complex, which will play a critical role shaping our strategies in response to pandemic, emerging infectious diseases, and the. biological threats. even in these difficult times, the 2012 budget is essential to our ability to take meaningful, science based action on behalf of the american people. with these investments, and with your support, i am confident that we can build on our past successes and better ensure our nation's health. thank you for the opportunity to testify, and i am happy to answer any questions you may have. >> thank you very much, dr. hamburg. we'll both sides of the aisle truly appreciate the time you have given us. we appreciate the ongoing

dialogue. with that, what to recognize the chairman of the full committee, how rogers. >> thank you, mr. chairman, and congratulations on your elevation to this chair. >> well, thank you for your role in that. >> we think you'll do a great job, and you already are. i like to focus my comments and questions on the fda's role regulating prescription drugs, particularly opium and narcotics. undoubtably, these drugs to make a world of difference for patients suffering from cancer or other terminally ill diseases which cause pain, but the abuse and diversion of these drugs is not our country's leading drug problem. in the last decade, there has been a 400% increase in those reporting abuse of pain pills. in kentucky, we're losing almost

three people a day to prescription drug overdose in. -- overdoses. people around the country are doing their part recognizing that we need a multifaceted approach to knock out abuse. law enforcement, treatment programs, and education will all be crucial, but regulatory agencies need to do their part. efta has an altogether upon role in this. in 1995, fda approved what you thought was the next merkel drug for cancer patients, a controlled release pain reliever, oxycontin. the active ingredient in oxycontin is twice as potent as morphine. the immediately undertook an aggressive campaign to sell as much of their drug as possible.

they chased primary-care doctors and doctors in remote areas who may not have been as adequately trained in pain management as perhaps others. they under played at the drug's addictive tendencies. within five years, oxycontin had become the most prescribed brand-name car caught medications for treating moderate to severe pain. they were bringing in the money. that is about the time people in my district started showing up in emergency rooms. in 2001, frank wolf and i testified before the fda, asking that this powerful drug, twice as potent as morphine, only be made available for the treatment of severe pain, where it can have the most positive impact on patient comfort and care.

our pleas fell on deaf ears. and the rule continued to be that oxycontin could be prescribed for moderate to severe pain. you have a sore toe? have some oxycontin. highly addictive, terribly difficult to shake. perdue was all to the refined in criminal court $600 million but for its unscrupulous marketing practices, and several executives even faced criminal charges. they had to reformulate oxycontin. you have recently approved the new version. they still sold $3 billion worth of the drug last year, and its generic spinoffs are not far behind. i will let you decide if justice has truly been served. what can be done? there is a thing called a

fleming go role, where there are more pill kirk's operating clinics in broward county, fla., ben mcdonald drive- throughs. people and other parts of the country are hired by drug pushers to get on the bus, go to florida with them. but they all go through the pain clinics, come back with a barrelful of oxycondone and other prescription medicines, or they are sold for 10, 15, 20 times what they paid for them. it and people are dying. because they are too easily obtained. fda has to be a partner in this fight. despite positive efforts in recent years through additional labeling requirements, collaboration with partner agencies, and increase communication with physicians, prescribes, dispensers, and

patients still are woefully under informed about the risks associated with these products. fda has to be fully aware of the implications of these drugs before they go to market, which is why congress instituted the requirement for extended release pain drugs in 2007. these programs must be more careful the classified. -- these potent drugs must be more carefully classified. it is reckless, irresponsible, and it is why prescription drug overdoses are killing more americans now in car wrecks. that about that. -- killing more americans now than car wrecks. think about that. that is why we have filed a bill to stop oxy abuse, which will

moderate and change the moderate to severe qualifications to be prescribed for oxycontin to just severe pain only. i would like your reaction to that. i am going to leave several questions for the record, mr. chairman, if that would be ok. >> without objection. >> a congressman from florida has a bill that would reclassify all hyper code known drugs, vicodin and others, as schedule ii drugs, which are more difficult to obtain. i will leave that for the record. second, congress required evidence that the benefit of a drug outweighs its potential risk. i have heard real concerns that fda is allowing drug companies producing extended release pain medication to develop a one size

fits all product. considering each medication is has unique risks,nd how will this one-size-fits-all approach encourage innovation and risk management? and finally, what is fda doing to incentivize and speed up the development of more tamper resistant or peace-resistant formulations of these drugs? dr. hamburg, i appreciate your time being here today to answer these questions. i am very focused, in my own way, on the drug abuse problem that is afflicting the country and killing young people even as we speak. today and kentucky, three people will die from drug overdoses that could have been prevented.

i think the fda needs to join the fight. thank you, mr. chairman. >> thank you. dr. hamburg? >> thank you very much, congressman rogers, for your very powerful statement about the problem our nation faces with the abuse of prescription drugs. it takes a devastating toll on individuals, families, communities, on our nation, and its impact is very severe and far reaching. successful, meaningful, and did during solutions to it, as you also point out, require true partnerships, because there are many players who need to play a role. fda has a critical role and we care deeply about it and i am personally very committed to helping lead the agency to engage more deeply on these issues with our counterparts in government and in other sectors,

and to look carefully at where we have responsibilities and where our activities and policies can make a difference. we are, as she said, looking very carefully at how we can more effectively use the authorities and tools that we have in terms of warnings and indications for use. we have also mounted a major initiative around the use of prescription drugs, and it is critically important and the area that focused on. it is a key component. there is also an administration-wide effort focused on it. that is key, to engage law enforcement, to engage educators, to engage the dea, which is involved in the reclassification. >> broward county, fla., nine

out of 10 prescriptions for oxycodone in the country are coming from broward county, fla. nine out of 10. it is still hasn't. there are thousands of them there. -- it is pill heaven. there are thousands of them there. we have asked the state for drug prescription monitoring program, which he has refused, although some 40 states already have the system in place. where do why turn? can you change the rules by which these medicines are prescribed for just severe pain? why not do that? >> i think these are important issues, and as you have pointed out, that involve many different agencies coming together. we reviewed and approved medical products for certain indicated

use, and that concern to be part of the consideration. they're also very important activities that have to do with the oversight of the providers and how they're doing their prescriptions, the trading of providers, and enforcement activities. >> it is really simple. it is really simple. this drug, oxycontin, was built, designed, constructed for severe pain, right? it is a 12-hour release pill. that is wonderful for those in severe pain, a terminal cancer cases and others, for example, but it is so easily dispensed and is so easily taken. it is such a wonderful drug to be abused that young people especially are crushing the 12- hour release into instant release, and you imagine the

pleasure it gives and it is irresistible, but it is killing people. can't you change that formula, simply leave out moderate? >> in how we are approaching the warning labels, the indications for use, we are mindful of those concerns. you also raised another important point, which is how we can bring better science to bear to make products that are safer subject to abuse. we neveneed to address the currt problem and also pursue those avenues as well. i am happy to hear about your work in this area and the bills you are proposing. we are eager to work with you. it sounds like maybe i should visit broward county and learn more. >> i will pay your way.

at that i don't know if that would be allowed. know that it't would be allowed. >> i agree with you, i am just getting off a broken arm, and the first drugs they threw at me were oxycontin tight drugs. while i was in a lot of pain, i was not in severe pain. i was afraid to take the drug because i did not note -- i know the effects are dramatic. go forsingle time i would a follow-up, the need more of this drug? i took four advil, which did the trick for me, but there were just throwing the stuff at maine. -- at me.

anyway, it is very troubling to me, just recently six weeks ago, i dealt with the same problem. >> it is incredibly import issue with huge ramifications. we are eager to work with you. we are involved in activities in this domain. there is more we can do. i think the partnership in terms of this administration-wide effort to score to make a real contribution. i would be eager to sit down with you, visit, flamingo road, did you call that? and also to it really lay out in more detail where we as the fda can make a targeted difference. >> that is why i am here today,

have you answer the question. if you strike out the word moderate, we cannot stop the people who are making zillions of dollars on the the guys that they are prescribing this for moderate pain. this is done every second of the day. if you only allow them to prescribe for severe pain, we could prosecute and go after the unscrupulous doctors at the pain clinics that are killing our people. it is pretty simple. >> i think as you point out, targeting for appropriate use is actually see -- is absolutely key, and we're trying to do that. it is hard, i don't think you'd be satisfied with the results by simply addressing that change in the indicator. >> it is a start. >> it is the broader abuse that

is happening that i think is causing this serious national problem. it is how you define moderate and severe, i think we need to have a concerted effort that is targeted at many levels to address the problem, that is cross cutting, that involves what are the kinds of drugs available, how are they prescribed, what are the oversight and restrictions on the use and abuse of those drugs, and how that is enforced. >> mr. chairman, i appreciate the indulgence with the time. that is what we have to do in our district. the state newspaper came out with a story that ran six weeks, screaming headlines that that area was the pain prescription capital of america. which prompted me to start an

organization called the night. recall that unite. we have 2600 undercover agents who do nothing but arrest people selling drugs. they have put in jail 3700 pusher selling these drugs from the flamingo road the source. we have kids in hospitals every day. kids dying every day in emergency rooms. we have built treatment centers. i go to graduations for people who have kicked these things and here wonderful tales. it is a pervasive, deep, widespread problem, killing more people than automobiles, yet you sit there and say we will not talk about changing the prescription rules for this killer drug. and i won't rest until we see an

answer, ma'am. >> i am happy to continue to examine these questions and go back with our expert team. my point is if we really want to make a meaningful and enduring difference, it is a different problem than simply changing the indication. whether it is an indication for severe or moderate, to prescribe. this ultimately making the decision -- the prescribedr is ultimately making the decision, and i am not confidence that it will change the behavior on flamingo road. >> it is a chance to prosecute people who are prescribing the medicine for other than severe pain. what could stop the problem at the source. you are in charge of the steering wheel. i expect some movement on this issue.

if you don't do it, we will do it for you. i cannot be much more plane than that. i don't mean to be blunt, but this is beyond a minor issue. this is a killer in my district, killing my constituents, and all around the country, and you could make a difference. >> i am eager to make a difference. i appreciate the severity of the problem and its huge ramifications on people. i feel we have a critical role to play it and we will engage fully. it to be successful, it needs to be a broader partnership, and i am committed to engaging in those partnerships to make measurable progress in this domain. >> thank you. >> i share your concern, and i

think you also have to go upstream and look at the manufacturers and sales. my cousin is a doctor and he says most of the information they get about drugs is from the sales person who tells them you all to use this for this and that. if there is that much supply going to doctor's offices, there has to be something to the with the message is given to doctors. i think we need to look at that as well. i think this conversation really goes to the point of how important your agency it is, the food and drug administration, and how difficult it will be to manage these critical issues if congress cuts your budget. a couple things i'd like to see if we could get better bang for the buck. one is in the area of medical countermeasures. as you know, medical countermeasures initiative was framed in the course of 2000,

based on the fact that we put a lot of money into the flu pandemic. i think mr. rogers played a major role in pointing out that was real serious. what happened last year was hhs shifted money from their account to your account to cover the new medical countermeasures initiative, but you need, as i understand it, language to expand to other types of copter measures that could work on. the idea that if we have the infrastructure to do that, we could look at countermeasures for other emergencies that might come from biological weapons or other things that could break out, contamination that could break out, pathogens, influenza.

that we have to isolate this work to one countermeasure, and i wonder if he could speak to how important that is to keep the money, how important it is to get the language that you need to be able to have those other countermeasures. >> thank you, this is a very important area for the health and security of our nation. we face a set of serious biological threats, such as pandemic flu or something like or an as yet unrealized. it. we're also increasingly foldable to intentional -- we are also increasingly vulnerable to potential release of biological terrorism and the health of individual impact would be

enormous. also, the huge dislocation to our society, the disruption in life as we know it, the impact on the economy, public trust and confidence in government and critical institutions, international security at its corporate that -- at its core. we want to provide medical countermeasures necessary to rapidly detect and respond to an emerging threat and to treat and contained a threat should it occur. anyway, it is a form of deterrence to be better prepared and to also limit the damage that can occur. >> my understanding is you have the money to do the work, you just don't have the authority to look at these other countermeasures? >> exactly right, the secretary of health and human services, kathleen sebelius, began a new

countermeasure last summer, and the fda was given resources to begin imports of work from the moneys that had originally been appropriated for pandemic response. >> we need to put that one which in our legislation, but it did not get into latest version. >> right, to be able to expand these activities to address not just pandemic threats but continuing biological threats before us, we need additional language. it is a no cost proposal that would allow for the use against this broader set of very important potentially devastating biological threats. we would be very appreciative if you could look at that. i think would make a huge difference to our ability to move forward in critical ways. there are important gaps in key areas. we don't have a treatment for acute radiation sickness, such

as what would occur after a terrorist attack using a radiological device. we don't have antiviral drugs to treat a number of critical potential microbial threats. we don't have the diagnostics that we need to rapidly detect and diagnose the emerging problems to treat them appropriately. >> yes or no, can we assume if these are not provided in the budget amendment that there is very little or no chance that he could find these -- you could fund these activities within the appropriation in hr-1? >> that is the case. this is a program where we are building new capacity. these targeted additional dollars are essential in fulfilling the mission of ensuring we have the medical countermeasures that we need.

in the present fiscal year we are also asking for money is to continue those programs that we are beginning to put in place now. it will make a difference. interestingly, as this broader initiative was being developed, one of the things that emerged was the role of the fda was absolutely crucial to the success, but it involves all the components of government, but the fda's role in being able to review and approve for safety and effectiveness these medical countermeasures was the linchpin of success. we very much appreciate you taking a serious look at this and helping to support efforts that will make such a difference to our nation and our security. >> thank you.

>> the gentleman's time has expired. >> thank you for being here in the job you do. i know you share my concern about counterfeit drugs entering the united states, in the supply chain, whether from within the that the states or abroad, yet the potential for this corruption of the system and a reward for doing so is growing. it is really interesting and frightening to see how sophisticated some of the methods that counterfeiters are using. last year in connecticut, $76 million of drugs were stolen. a year before, $5 million of drugs were stolen in virginia. this illustrates the fact that this is a problem bigger than mere counterfeiting. the stolen drugs that are removed from the supply chain or simply lost, before we

appearing, and that could possibly be here and could also appear as treatment for us. last year the committee included language asking fda to examine methods and technologies by which these drugs could be tracked within supply chain from manufacturer to the patient, with a minimum of cost to either party or anyone in between. i wanted to follow-up on that request for the new standard, just to gauge your opinion on the possible role for the fta, as well as to ask you -- for the fda, as well as to ask you if you see a national system safe and affordable? >> you raise a critically important issue. increasingly in our globalized world, we need to be thinking about drugs coming from many parts of the world and complex supply chains that the drugs go through, with webs of producers,

manufacturers, suppliers, we packagers, exporters, importers, and all along the way there is the opportunity for the potential introduction of problems, sometimes unintentional, and sadly we know deliberate. counterfeiting is an increasingly significant criminal enterprise. because the penalties for trafficking in counterfeit drugs are much less than in illegal drugs, there is concern that organized crime is increasingly entering this space as well. we know the impact on people are huge. he mentioned drug diversion. there was a recent case where insulin was stolen, disappeared from the marketplace, and then reappeared, but the only way we found that it reappeared as we started getting reports that diabetic patients were taking insulin, they were depending on

this drug for a very serious medical problem, and it was having no impact. we determined that this insulin was from the stolen. the ability to track and trace is essential. we would very much welcome the chance to work with congress, to look at the opportunities for new legislation. i know there is a bill that has been introduced that would give additional authorities to fda to help us secure the safety of the supply chain and address these global challenges. >> california has a standard which is set to be implemented in 2015, and even with the best possible state model, the think

a state-by-state approach is more effective, or is it more sufficient to have one single, national approach to the problem? >> i think this is a problem that crosses state borders and crosses international borders, and the goal of the standards are harmonized is important. it is important government and industry, as they think about how that would implement this and the cost of implementation. >> can you estimate the pervasiveness of the counter that problem? >> we need better data. it is a worldwide problem. we don't fully know the nature and scope of the counterfeiting. in some parts of the developing world, as much as between 30%- 50% of the drugs on the market

place for serious diseases are a factor for it. in the united states, we have a much more closed system, and the fda is working every day to ensure that the drug supply is safe and when you go to your pharmacy, what you get is what is purported to be. but we know the problem is real here as well, and that we need to be proactive and aggressive and we need to be very cognizant of the fact that as the world becomes more globalized and more drugs are coming from being manufactured overseas -- >> the gentlewoman's time has expired. >> i look forward to working with you, and thank you for allowing me to go early. >> thank you. >> thank you, mr. chairman. thank you, dr. hamburg, for

being here. i would like to focus on the drug avastin. as i understand it, the fda granted accelerated approval for avastin for the treatment of breast cancer in 2008, and now the fda is looking at withdrawing that approval. it is my understanding correct? >> there is an expedited approval mechanism that is enabled on the basis of fairly early data on the drug's safety and effectiveness to grant a modified form of approval, expedited approval, and then require additional studies to be done, and then a decision is based on the broader set of data whether the drug should get full formal approval. in this case, after additional

studies were done and an advisory committee of experts was brought in to review the data, a decision was made not to give avastin full approval. i should say that we are in the process of working within the legal framework of this approval, regulatory mechanism -- we have granted the company that makes avastin a hearing, a public hearing with the fda, making their case. because we are in the middle of that process, i actually cannot comment any more deeply about this drug. >> you cannot tell me -- you approved it then, and you are putting it on hold now. you cannot tell me, what is the problem?

>> the additional data that was collected and examined both by the fda scientists and reviewed by this panel of outside experts did not support the full approval for the indication. however, as i said, because we are in the middle of the legal process and i ultimately will be reviewing all of the data, under this system of public hearings, and a subsequent decision, i am really not at liberty to have a full discussion of the matter ough. >> it is my understanding that this drug does not cure breast cancer, but it does prolong a woman's life.

the initial indications might be as long as five, seven months, and now it may only be three, five months. because it did not do what we originally thought. >> if i could, because i am in a difficult legal situation, because there is a legal process with a hearing, and ultimately i need to be the final decision maker, and so i need to be at a distance from this. if i could asked our centre director to speak to these issues? >> think. i am janet woodcock, the head of the drug center. avastin is approved for multiple cancers. the regional trial showed an effect on what is called progression-free survival, which does not have anything to do

with living longer. it has to do with how long before your x-rays show the disease has progressed. the subsequent trial did not show the same effect. it was a much smaller effect on how long it took the x-rays to worsen. there is not a claim that avastin improves revisal in this setting of life. the dispute was over the length of time it takes to progress want to have the disease. it does that make sense? >> i may have said it wrong. initially, it was thought to be five-seven months. it since it is shorter, you are saying let's pull it? >> the initial was a surrogate. that is why it is called accelerated approval. progression-free survival was generally in this case that your

x-rays don't get worse. it is considered a surrogate for having some actual benefit to people, say, not developing pain or fractures, or actually living longer. the subsequent trial showed a smaller effect on x-rays not getting worse, which are advisers and ecologists did not feel it -- which are advisers and cancer doctors did not feel would help reduce pain, reduce progression, or longer life. >> thank you very much, mr. chairman. i would like to take a different tact and began with the statement, the obvious assertion that america will experience economic recovery when people get jobs and go back to work. i follow with interest to continue outsourcing of u.s. jobs, including by pharmaceutical companies, making medicines and devices

everyplace else in the world and moving jobs outside of our country. every day i asked myself, how could we make goods in america again so people can go back to work? there are some who believe that we can fix what is wrong with our economy not by creating jobs in our country but by simply cutting back on public health and safety, as is evidenced in hr-1, the continuing resolution offered by the majority party. cuts inspectors for food safety. i want to turn to questions i have asked in the past regarding tracking what is going on with the manufacturing of heparin, the cost of that through public sector in medicare and medicaid, and go back to march, 2008 when the new york times had an article that said the food and drug

administration had linked it to 19 deaths and hundreds of severe allergic reactions, though the agency was continuing to investigate. those deaths and a large degree actions were due to components that and it up in heparin, that ended up getting into it from china. i was wondering if you completed the investigation and how many people may have died from those of imported components? that is my first question. have you finished a report, is there additional data? then i want to ask this -- you have kindly submitted for the record from previous question i have done questions that i have asked regarding heparin./ heparin is actually made from the intestines. i represent a lot of hog farmers, so i am interested why we would go to china for

heparin. the test teens -- the intestines are ground up, extracted, and they eventually get the protein. i don't know if it is a blood thinner -- >> blood thinner. it keeps you from getting blood clots. b>> thank you. what is interesting about what you wrote in answer to my question, he said the fda had approved applications to market heparin, but it does not say anything about manufacturing. it is not clear where the ingredients are made. i want to know for the three or four companies that are listed that are supposedly marketing it, how many of the ingredients come from the united states? i will push you a little on this, maybe not today, but in further questions.

i'm also going to ask about damages. our government and the american people were not able to recover damages from the deaths because of contaminated imports? and where would i get how much money is being made by these pharmaceutical firms in marketing these products compared with one it takes them to manufacture? can you get at that, or where do i have to go for those numbers? >> you have asked a string of questions imbedded in the one important issue of heparin, and some of that we may have to get back to you one. the experience with contaminated heparin was very serious. it was an eye opener to the fda

and the pharmaceutical industry into our nation more broadly about the fact that we need to be paying attention to the fact that the supply chain for many products in this nation is complex and global. as you point out, the precursor for heparin that is used in the u.s. and manufactured by u.s. manufacturers, but much of the precursor comes from china, which i think has more pigs than any place in the world. >> we have a lot in ohio, too, and we would like to compete in this market. >> but it cost, as you pointed out, serious allergic reactions and many deaths. >> do we know how many deaths yet? >> in terms of the documented

deaths, i think -- nine >> why is it impossible to know? >> because sometimes the providers don't make the association between the death of a patient and the contaminated heparin. they often have complex medical illnesses, and when a person expires, the connection was not necessarily made that it was because of the heparin. as with all the investigation and we began to understand the and between the hepaeriarin fatalities, we know that it took a serious toll. in response, we have put in place and number of protective measures, a new screening tests and safety systems, also working with regulatory authorities in china on this and working with the private sector so that we

have safeguards that this kind of the event will not occur again. but it is a warning call about vulnerabilities in the system that we need to work on. i think my time is up responding to you, but we're happy to follow up further. >> thank you, i want to thank the chairman for his generosity trying to get to the bottom of this. that has been extraordinarily difficult, and we're going to keep digging down into this. we're all struggling to try to find the money to balance the budget, and if you look at the amount of money that our government pays for the medicare and medicaid accounts for heparin, for a drug that is off patent, it is unbelievable. this as many links to it. thank you very much and we will have many follow-up questions on

heparin. >> thank you, the members of this committee have a lot of passion about our issues and we appreciate your time. i want to visit the discussions you and i have had about food safety and food modernization. using the cdc numbers which you have -- and i agree with you, 3000 deaths per year is horrible, we need to do something about it -- but where i have an issue taking the emotion out of it, and we have talked about this, 3000 people dying per year is down 40% from last year. again, it is too high, we need to keep working, but it is down 40% from the cdc numbers. 48 million foodborne illnesses per year, a decrease from last year. it's still too high. but in a country of 311 million

people, eating three meals per day, 365 days per year, consuming 340 billion meals per year, if you divide that into 48 million, there is still a food supply that is 99.99% safe. where is my math flaw on that? >> well, the key numbers are that we know about one in six people get sick every year from foodborne illness. >> let me interrupt. the key numbers come from the cdc, and those are the numbers i have used. those are the numbers i want to stay with. where is that math lot? -- where is that math flaw? >> we're seeing preventable deaths. we're seeing even more preventable illness.

that is associated with preventable costs with the health care >> you agree with my mad that it is 99.99% -- h. i agree with your mat we have one of the safest food supplies in the world. >> the concern i have is, are we targeting the 3000 people effectively? if we move that number from 99.99% to 100 percent, which you and i and everyone on this committee would want to do, are we going to get their? are we going to get at -- with this bill, i will tell you where i have concerns.

there is nothing in there that attacks the virus. in your testimony, you mentioned that you have permitted a test for its last year. but that is the only mention of noravirus. the cdc said opprobrious hand hygiene is the single effort to permit the transmission of the virus and reduced presence. it is best done by plane antiseptic soap. we are talking about 17,000 new fbi employees. that is not addressed -- f employees. the second-highest is salmonella. i come from poultry country.

before the food modernization act, the fda did formalize the egg rule. it could be avoided with this new food safety requirements, which you put into effect last year. i do not want to say --i will let you respond. you did not mention the third highest in your budget. it would appear to me that those are the three things that we need to target in order to close the percentage. in these tight budgetary times, it would be a lot smarter approach. >> mr. chairman, i understand your concerns.

we all recognize that we have a food safety -- a food supply that is generally safe. no one can argue that we are experiencing a set of preventable outbreaks due to a range of microbes, some which cause more severe disease. it is a range of concern and a changing panoply of concern. salmonella was not thought to be such a major concern in peanuts. today, we know it is a different situation. >> this is only july that we have had the new salmonella rules. >> i think what we need -- >> the peanut problem which occurred in mr. bishop's

district was a criminal act and not so much food safety. it was a criminal act. >> we are increasingly seeing salmonella in those kinds of products. we can not only have a food safety system that addresses problems that have happened. we need a system as the food safety modernization act calls for to prevent the introduction of contamination of any kind. that is what i think is a huge opportunity here, to move toward a system that is based on prevention so that we can prevent the unnecessary gaps and the unnecessary costs to the health care system and the unnecessary costs to industry and to our economy more broadly. in a globalized economy, we have a whole set of additional threats to the safety of our work could supply that we need to be mindful of and prepared

for. we are trying to create a food safety system for the 21st century and beyond. we have a responsibility to take that seriously. congress has given us the mandate to do so. i am excited about the opportunity to keep moving the dial so that our food supply is as safe as is possibly can be. >> my time is expired. >> thank you, mr. chairman. i wish we had a whole week of this panel. in essence, we are talking about -- by the way, i do not think we have had a head of the agency who has had to cut -- such a tremendous academic and medical background that you have. i am please that you took this job. you were the first responder --

you are the first responders to any illness that happens in america. your illness -- your agency is the one that has to stop it, find cures for it. i think that in this big budget slashing that we have to do -- i wish it was not so much slashing as we could do a microscopic surgery. that is what we need to do. as surgery is done that way, it has to be smart and effect. but we do not do it that way. i am thinking we need to have a week of hearings discussing what would be a day without the fda. everything would come to a grinding halt in this country. you are responsible for articles used in food and drink for

mankind and for animals, things that we do not think about that are regulated like chewing gum. you have put a lot of that in your mouth. dietary supplements and dietary ingredients, infant formulas and raw agricultural commodities, such as what we grow in our area, like lettuce and carrots and things like that. canned and frozen food, live food animals, bakery goods, snack foods, candy, chewing gum, etc. this is a whole list of things. in our new law that we passed in congress, the food safety modernization act, which did pass with broad bipartisan -- the chairman has

already pointed out the number of deaths that have occurred in this country. the president has asked for $180 million for implementation of the new coup plot. what would happen if that money was not appropriate, if the congress did not give you the money to take these tough our responsibilities that we -- tougher responsibilities that we have given you? >> we are beginning to implement some of the new mandates and requirements contained in that bill. we will be able to make significant progress in key areas. we will continue to be able to put forward -- >> if you do not get the money,

it is a question. >> if he did not get the money, we will not be able to fulfil the ambition inspection mandates domestically and internationally. we will not be able to get that hands on look. on thes follow up inspections. a lot of the products we need in winter time -- we are eating a lot of fresh vegetables -- a lot of that come from -- comes from mexico. we also sell a lot of food brought in the united states. california growth 80% of all the eaten in -- almonds the entire world. those enquirer -- those require inspections. if we do not live up to our regulations, what does that do to the movement of food supply?

particularly with fresh roots and vegetables. >> 40% of the fresh fruit and produce comes from outside our borders. the food and drug administration has a responsibility to guarantee the safety of those products. we need inspections at the border, which is hard to do and time intensive. we need to go out to where the products are coming from and insure the safety of that supply chain. as you point out, we also need to have companies in a robust food safety system in order to support our exports of food to other parts of the world. when there is a preventable outbreak, it can have a devastating impact of the health of that sector of the food industry into the sales domestically, as you well know, and the ability to export. if we cannot do the inspections

that we need to do, we will not be able to assure the american people that the food they are putting on their plates and serving their families is safe and wholesome. >> if you do not do the inspections, who does not move. >> who does not move. >> thank you. members of the committee, we are expecting a vote in the next 10 minutes. what i would like to do is win the first bill goes, i would like to vote and come back. we can rotate in and out and maximize our comments with dr. hamburg if that is ok. just what vote. there will be plenty of time. >> thank you, mr. chairman. i want to continue the questions

about the food safety modernize asian act. -- modernization act. how much is in your 2012 budget for the implementation of that act? >> it is $183 million. >> $183 million. how will we know this time next year if that $183 million has achieved the results that brought about the bill's passage? what monitoring our tracking will we have this time next year? >> we intend to track carefully our performance as we move toward implementation of the food safety monetization act. we recognize there are a number

of key areas where we have to make significant progress moving forward. we need to put in place preventive risk based approach is working with industry and farmers and producers -- risk- based approaches working with industry and farmers and producers. we need to continue to expand our production. it takes a number of years before an expected is trained and able to go out into the field and performed at full capacity. some of the impact of dollars today will not be seen for a few years down the road. we will be strengthened in our employ safety activity to make sure that we expand our inspections overseas and work with industries to ensure that boots are being manufactured

according to our standards -- foods are being manufactured according to our standards. that is an important part of the act that we have not had a chance to talk about yet. we will be working with states and localities in terms of helping them stand in their capacities and the contributions they make in monitoring the food safety supply and responding to outbreaks when they occur. there will be clear activities underway. we will be promulgating produce safety rules. we will be putting in place other guidances and taking other actions concrete in terms of what is required for implementation. i do want to caution that much of the transformation that needs

to happen and the building up of programs will take time. it is not a one-year activity. it needs to be a sustained activity. >> will the gentleman yield? >> yes. >> you are talking about 17,000 employees in a one year. period, correct? -- in a tin ear period, correct? -- 10 year period, correct? you are talking about massive bureaucracy.

every dollar that we spend, 40 cents is borrow. ed. >> your response was on activities. i am new here. my observation is that when government measures and monitors, it measures activities, not results. the follow-up question is not how are we going to measure activities, but how are we going to know in 2012, is this $183 million a sheet in your results? -- achieved in your results? >> you will not see the results in the same fiscal year in all cases. we will see, if we do this

right, fewer outbreaks of human borne disease. we will see fewer people sickened by the food they eat. we will see a system that can better ensure that food produced in this country and overseas coming into this country will be produced according to our same standards and will be as safe and wholesome as we can assure. >> my time is expired. i will get back and follow up. >> congresswoman kaptur. >> thank you, mr. chairman. how many drugs have been approved in the area of mental illness? >> every year i asked that. i was wondering if you could

expedite the platform of these debilitating illnesses that affect many people across our country. i want to go back to the pepper and -- heperin issue. how complex a medical product is it compared to other products you regulate? is it at the top level of complexity? is it medium or assemble them simple? >> it is a complex molecule. >> do you know where the ingredients for heperin is produced ji? there are materials that come from many different sites. >> is fda add to those sites?

>> we do not have the resources to be at the site of every product where it is made. we tried hard to use our resources wisely. we are at manufacturing sites to its best -- to inspect them before we approve a new drug. that is when the drug is manufactured. we work with companies. >> i am at a little uncomfortable with what you are saying. if i make a cake at home and i look at with the ingredients are from, i know where they are from my reading the label. for these drugs and medical products like heperin, there is a lot to be made offshore. how do we know what conditions those pigs live in?

>> one of the reasons we have developed a much broader international program is so we can get a handle on these issues. we can be on the ground working with manufacturers and regulatory authorities. >> i wish i could get you on the ground in ohio. when i look at some of the answers to pass questions, it looks like illinois and has this wrapped up. we are looking at three companies all in illinois i. . three companies. i wonder if they have connecting doors. according to information that you provide -- i am going to become an expert in heparin. if americans die, we should know why. we should understand the production chain. it will help us with what is

happening with other medical products. according to your answers to us in the record, my question was, what percentage of heparin's ingredients were domestically produced as opposed to foreign produced? the components produced domestically persons abroad is determined by each manufacturer according to their specifications. then it says, manufacturers of the finished product do disclose the source of the active pharmaceutical ingredients. you are not on the ground where the source is being produced. you are saying fda would need to review the application to determine the components of cornyn --foreign made products.

the applications contain information that is a trade secret. heparin is off patent. it has been around for a long time. it is a trade secret, commercially confidential or otherwise protected from disclosure to the public under the freedom of information act, the trade secrets act. if something is off patent, why don't the american people have a right to know where the ingredients come from specifically? what is missing in the law? >> i think the problem is that heparin and many other products are made in complex ways that have ingredients that come from many places. the companies take responsibility for making sure, to the degree that they can,

that the supply chain is safe and intact. we have a responsibility to oversee that process. in terms of our resources to be in every place where a precursor material is made -- >> is it within your purview to insure user fees on the company that the products that come back safe?re saint jore >> there were things done to insure the safety of that product. there were things that about more intensive screenings of the precursor product, more intensive screening of the manufacturing procedures. more intensive screening of the final product. >> who is paying for that? >> we are working with industry.

they provide user fees for the components of the work that we do. budget authority pays for many aspects of this program. the industry, directly, through their work, takes responsibility for components of it. >> thank you. there will be more questions. >> thank you, mr. chairman. welcome. i apologize for not being here earlier. there are a few other things going on this morning. i want to thank you for coming by and visiting. i appreciate that very much. last summer, the food and drug administration released its guidance to keep animals healthy and products safe. you laid out plans to phase out the use of growth production antibiotics as the fda refers to

them. the production antibiotics served to roles. to improve the overall health of growing the animal and improvement in the efficiently. growth as a result of improved integrity.u gut this guidance will directly help the impact on the health of the animals. i am curious as to what sort of out of reach the fda has done with the producers themselves to get their input? these are farmers who care for these animals. they produce a bountiful and say who supply. i think that type of out reach is extremely important to really

understand modern production agriculture. can you talk about that? what kind out reach there is an communication. >> our center for veterinary medicine has been deeply engaged in this issue and those conversations. it is an important concern. antibiotics are vital for treating illness and disease in humans and animals. it is a vital resource, but it is a limited resources in terms of the number of antibiotics available. we do not want to be in a position where antibiotics resistance develops and we no longer have tools to treat serious disease in people or animals. that is why we are moving to try to find a framework for their use that is judicious and thoughtful, never denied antibiotics for -- never denying

antibiotics or appropriate treatment when there is an indicated medical need, but reducing use that can contribute to antibiotic resistance and is not medically indicated and not for therapeutic purposes. we have been working closely with producers and industry. we have had a lot of ongoing conversation and a lot of back and forth. we are trying to move in a voluntary way to accommodate many of these concerns. we are working with the budgetary committee so we can ensure that antibiotics are administered as appropriate and with appropriate oversight. >> to clarify, you are saying it is better to wait until all the animals could sit? or to have healthy animals all along?

>> we want to have healthy animals. but we do not want to lose -- want to use our antibiotics in a way that can cause serious problems. ante beyond resistance is a serious problem. when there is a therapeutic indication, at have got it should be used. for growth promotion -- when there is a year -- there is a therapeutic indication, antibiotics should be used. our ability to have this vital resource of working effective by attics -- effective antibiotics means we need to move in positive direction. >> in my mind, it is better to have a healthy animal to begin with. just like healthy human beings.

rather than to wait until you have a food risk with these these animals when you wait until after the fact. the idea of growth promotion is just because they are healthy. it is not because they have for months or something being fed to them. >> but we know you can reduce the use of antibiotics in those settings without compromising the health of animals. we need to be judicious in how we use these vital resources nico. >> i hope there is input from producers. they are facing record input costs. they're not going to be overusing anything because there bottom line is affected.

it is to their bankers to have the healthiest and most possible going into the food -- it is to bear this -- to their advantage to have the healthiest animals possible going into the food chain. thank you. >> thank you, mr. chairman. good morning, commission. secretary sebelius was testifying at hhs. i wanted to make it to be hearing this morning. thank you for the good work that you do at es the fda. three years ago, the fda was

still under foreign -- underfunded that it could not perform its mission. progress was made, but it stalled with this year's continuing resolution. the house passedhr 1, -- passed hr 1, which would cut the fda. my view, as someone who runs for office every two years, if you cannot quantify what you have or if someone cannot tell you where it is coming from, you do not have any idea whether or not you are going to win. it is about the numbers. how with the fda accommodate that kind of cut and what would it do to address problems identified by the science board in 2008. if the cuts were implemented, would it lead to fewer food

safety and medical product inspections? how many? would be cut impact the amount of imported food and medical products that get inspected? how many? given that cuts would have to be enacted during a short amount of time, with reductions in the fda inspection force be necessary? the present budget -- it president's budget identifies some problems with the science board. where does it lead us? it fails to fund adequately in fiscal year 2012. what would that do to the agency's ability to fulfil its mission? what are the risks to public health at the fda is not able to perform its mission? >> we face a worrisome situation in terms of being mandates and

responsibilities. bailout step our resources and have for many years -- they outstep our resources and have for many years. we are grateful for the help we have gotten to help build our budget. it has enabled us to put in place programs in the key areas to protect the health of the public. if we had to face cuts of the magnitude you are describing, it would be devastating. the size of the cut is equal to the budget of one of our centers. we would absorb it across -- a >>

>> i am looking for some specific numbers. the import is lost if we do not have the numbers. i was concerned about finding last year at this time when we spoke. in order to move on a piece of legislation, which is so good and needed, but without the resources to do it, what are the consequences? it is a question of the resources for 2012. we have looming here hr 1. i want to know specifically how many food and medical product inspections, what impact on imported food and imported medical products?

if you cannot answer them today, i want it laid out specifically so that it is well known that what we are playing with here is at our risk. we need you to talk about the agency's ability to perform its mission and what the risks are to public health. i do not know if you have any of those numbers today. >> i cannot give you exact numbers in terms of how many fewer inspections. it will be significant. we will be unable to do inspections domestically and internationally at the level we need to be doing. we are already not at the level we want to be at and that we know really matters. we will be delayed in our ability to review and approve new medical products that come

before us. that will have an impact on people who need and are counting on those products. it will have broader impact on the economy and the health of the companies making those products. , the jobs associated with that, our ability to maintain exports in key areas and our global economic competitiveness. we would not be able to do the work that needs to be done to assure the safety of the blood supply. the fundamental things that matter to people every day. we need to be thoughtful. we all recognize that we have to tighten budgets. we will work with congress going forward to examine how we can

achieve important cost savings. the president's proposed budget does contain significant administrative savings across the agency. we have critical and unique craft that are vital to be he alth and safety of people. >> we need to have a catalog of the blood supply and what that means. it is critically important for this committee to know in terms of what its actions need to be. it is important for the public to know what is about to befall them if this piece of legislation passes today. >> i will recognize myself to follow up from where i was. >> we talked about how the budget request from this year was 183 million. i will acknowledge that i am new

here. i am still learning. the approach i take is the approach i took in my business before i got here. the same approach american consumers have. what do we have to spend and what are we going to get our what we spend? do you have a 10 year as demand for what the enforcement of the food safety modernization act will cost? >> in order to fully implement the food safety modernization act and it's important mandate and requirements, -- its important mandate requirements, we would need comparable increases all but the next couple of years to get us to the overall working budget for this program. as a businessman, i think you can appreciate that there are some investments that have a greater return on investment.

it is important to underscore. this opportunity that we have to transform the food safety system in our nation is going to have a much more profound impact than what you are paying up front in terms of those dollars. it is going to reduce costs to the health-care system, a predictable cost though- preventable causes. -- preventable costs. it will support the health and growth of critical sectors of our economy, enabling them to have broader market here at home, more confidence from consumers as well as stronger export markets. there is a huge return on investment.

the cost of these outbreaks of food borne disease that we know can be prevented are enormous, in the billions. well over $100 billion. >> i want to continue to pursue, but i think the chairman is back. i will go back. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> we are trying to run this in everyber that ist this dietary guidelines. and i know that you've been involved in this in new york city and so forth. been involven this in new york city. salt is already on everybody's drop lists. there are articles that take the other side on salt. i will submit these for the record. there are five or six of them right here.

they are on a that based discussion level talking about the sodium intake. they give a counter side to it. as someone who is at fda, while it is ok for a group to take a position, i do not think the fda should take a position on that until they have look at all the facts. i will submit this to you. i would like you to get back to me and let you -- let me know what your comments on that are for the record. i also want to switch gears right now and top about a gao report that came out one year ago. it was on the office of criminal investigation. it operates almost autonomously with the director deciding which cases he or she would

report to fda senior management. are you familiar with that report? >> i am. >> have you taken steps -- steps to rein that in? they should come to you and be a part of the fda core mission and prioritize rather than have an autonomous group doing it their way. the gao pointed out that their budget had rose by 73% since 19909. the number of employees have got up -- rose by 73% since 1999 and employees have gone up 40%. have you implemented gao

recommendations or do you disagree with them? >> we took it extremely seriously. a group of individuals follow up in terms of developing a set of actions that should be taken based on that report. we are moving forward with bad. -- with that. >> can you give me a list of what they are investigating and why they are investigating it? >> i am not sure i can give you a list of what they are investigating. i would be happy to if i could. in terms of the kind of work that they do, it relates to some of the important questions that were asked about the control of counterfeit drugs. >> you feel like what they are

doing is consistent with the core mission even though fda senior management did not know what they were doing >>? ?hei >> there were a number of concerns and we are working closely with the department ig because it is part of a coordinated effort to address a set up enforcement and enforcement -- enforcement an investigation activities. we are in a. period trying to examine systems and how they work. we have new leadership that is overseeing and we are recruiting for a new head.

>> you are aware they have increased 73%. you have the gao number. here is one of my questions. there are two members of congress who ride bikes to work. i am one of them. jeff novitski, who does he answer to? >> his boss would be the head of that office. >> that is the vacancy right now? the head right now? >> we at an acting head. >> he would answer to the acting head? >> and to the person who oversees our inspectors. >> he is four away from you, so

to speak. here is my very important issues in food safety and drug safety. if i google know wiki and i invite you to do it. i just want to confirm. do you know how many hits come up? 116,000. and including going to france to investigate lance armstrong, if he has broken the law that is very serious matter but it almost appears to me there's a little adventuresome isn't going 9 hear, i would like to know how much have been spent on this investigation and why so much money has been spent and is there anybody here who can give me that? >> we could did you now we would be happy to follow up with you.

this is in conjunction with the department of justice. >> you are aware of this investigation and you are aware that millions have unspent, lots of time and i would like to know what priority that is in the food chain because what i'm very concerned about and i hope i am proven wrong, that because it is a celebrity and one quick way to make a name for yourself in this town in politics is to bring down a celebrity and certainly people whatever their status is need to follow the law but it appears that millions of dollars are being spent, lots of employees are involved in this and i'm not sure why so many resources are put in front of the issues, the cotton that mr. rogers raised or the issues miss emerson race, what i want to see from you on this priority list,

and i understand you have to keep some of this quiet, i would like to know where this is in the primary list and see how many dollars have been spent because i really believe this is one man's terribly personal may be a personal issue after somebody else. i am not sure where the balance is. i want to know where it is on the priority list. why it is where it is. how many people are in this investigation and how much this has cost the taxpayers. >> i appreciate your concern and have raised similar questions myself in the agency. >> the irony of it. i will set up -- i just want to say to you as a bike rider, the whole these things americans can do right now, and i know your personal interest in health, but this is an icon who revolutionized by grinding and brought it home to so many

americans. it is a different matter. but i sense this is blown out of proportion in terms of resources put into it. in terms of public health this is a huge icon that your agency is trying to take down and maybe it should. i am not saying you are wrong on this but what i am saying is you're really going after somebody whose name is synonymous with health. >> i understand what you're saying. is an ongoing investigation in coordination with the department of justice. i can speak to the details but we would happy to be providing information that you ask for. also hope you wear a helmet when you ride your bicycle. >> i do. occasionally stop at red lights as well. mr farr? >> with the disclosure of how much you ride a bike want to invite you to the greatest bike

riding event in the entire world, the sea otter classic in monterey. by events of every single type. i hope some day but -- >> as long as they have a slow line i'm on board. >> i tried to to the 17 mile drive but turned around before we completed the circuit. i blame my kids for not wanting to go further. >> we are a big friendly community. thank you. a lot of this discussion has been around cuts and essentially new appropriations. i would like to focus for a minute and user fees. when we passed the food safety act we had some user fees that got knocked out in the senate version. there was a user fee jet was an annual registration fee that the food safety enhancement ask,

annual registration fee for food facilities and by understand the food facility in the industry supported it and consumer groups supported it and it was to provide fda with needed additional funding. where is that user fee proposal are? >> at the present time there is an interest in continuing discussions around fees that could help to support the food safety modernization act. as you know, industry had been supportive for components of industry of some kind of registration fee. when you think about food safety, it is an issue where to both the public and industry have such huge investments and concerns in terms of the outcomes, the benefit. so it makes sense for it to be a

shared responsibility in terms of supporting the program. we hope there will be continuing discussions with industry and congress about user fees. as the president indicated in his budget we are hoping in 2013 there will be a proposal with that. the action before then would be most welcome. >> you need the authority to do that and we need to revisit that. my district when i was on the board of supervisors, every county in california the county environmental health offices have restaurant inspection fees. every kitchen is required to be inspected. nobody likes that but it has an incredible effect on making sure food preparation in the restaurants, food for profit institutions are done according to health standards. there doesn't seem to be anybody

wanting us to repeal that fee. but you find a benefit for the fee. there is another fee that the president's budget anticipates is going to raise $61 million. a voluntary fee, but qualified import program and a wonder if you could tell me how that is working as we talked about earlier. i am very concerned because of lot of fresh products are grown in mexico and coming in to the united states and fresh product going into the united states because mexico's the number one trade partner in california and california is the largest agricultural state in the union so lot of that trade with mexico is agriculture. and because of our inspection issues is that agriculture is delayed either on the mexican side or the u.s. side, it is

lost. and concerns are all about that. he want to reduce your own inspections recreate this fast-track program like we did in tourism for folks who fly regularly all the time to -- i forget what the passport is that people who coming to this country and pay $50 or more than $500 figure and get extradited through customs and all those. i wonder if you think this important program is going to work and work so that those who are spending that money will make sure they get fast-track. >> as we talked about already the challenge of dealing with all the imported foods is a few rich one and we need to find ways to extend our region and we need to find ways to have a risk-based approach and this is one way to help in that regard where we can reward people with good track records in terms of

being able to recognize said they have demonstrated adherence to standards and quality they don't need the level of inspection the other purveyors require. we need a risk based strategy overall so that we can target limited resources we are developing a set of new tools and strategies, some that change with the food safety modernization that in order to extend our reach internationally and to utilize third parties. i think we don't yet have the foundation of a program in

place. will take a while to build a program but-think we would anticipate the event will be a program that will be subscribed and successful and i would hope we would be able to recover that amount of money but again this is a request for 2012 so we won't be seeing it immediately. [inaudible] >> my sincere thank you and appreciation for the work mike taylor is doing in meeting with growers. are know where you are so you are hiding back there. the effort you have made to sit down and listen and show concern

and understanding for very complex process, trying to insure food safety. almost everything we produce in the united states has some kind of process where you can sterilize and sanitize it except leafy greens like lettuce. you can't cook were there is no heat process. so you really have to deliver all that food safety into the growing practice to be able to have tracesability and the industry -- california industry is way ahead of the world. we are excited about it. they are the ones who came before this committee, shark this all by saying we need to be regulated. they set up a bunch of tough regulations and they're asking the nation to be regulated like they are and it is a good program. >> agree. i have an opportunity to be briefed on what the california program was. and was voluntary and it was a

very positive step. for what it is worth one of my first jobs was a cook and away we sanitize the lettuce and personal we soaked in salt in order to kill the bugs. i'm not sure if that would meet her standards or not but it was so much better than--i might have to give you some some time. i knew i could count on the italians to say that. >> salt, pepper, oil, garlic and parsley is all you need. >> the southerners and the italians merge on that one. >> thank you. commissioner, it jar 1 dropped the language specifying the level of generic drug funding in the 2010 bill. there's no report accompanying that bill. there's no idea of how much the

bill would provide. since it also cut funding for the drug centered fda by 10% below 2010, 14% below the 2011 request, we can assume a cut in generic drugs would use these amounts much more given leases the fiscal year. let me ask about your concern about the impact of the cuts on generic drugs. do you foresee a slowing of application review and a loss of savings to patients in the health-care system as a result? what i am trying to get some idea of so that we know what consequences are, the sense of how many fewer generic drugs would be approved under h.r. 1, what can you tell us? >> we have been making progress in terms of addressing the

backlog and moving product review forward. is really quite impressive. we review -- we approve 2 drugs. business today at the present time and we know the generic drugs are a huge difference in terms of access to critical medicine and this cut would set us back. it would mean our backlogs would increase. we have fewer drugs being reviewed and approved. >> any idea how many? >> i prefer to get back to you with exact numbers but again, one of those issues where we have to be foolish. a small cut to that program is going to have repercussions in terms of cost to the health care system and 75% of prescriptions in this country today are

generic drugs resulting in huge savings. >> that is the point want to make. we are taking a look at how we're trying to save money and cut back across health-care. there's also something you don't have to comment on. something i want to go after and that is the opportunity to pharmaceutical companies have where they pay to delay. paid to delay a generic drug from coming to the market. in essence paying their competitors to do that. may make agreements in order to do it. if that were not allowed and if we could move generic drugs to the market sooner, that one specific item i mentioned on the delay, if the federal government was purchasing drugs, through medicare or medicaid, it is a $3 billion saving.

when you think about the savings that could be made when we have generic drugs going to the market, in fact we begin to look at how health care costs get reduced which is what we're trying to do. the other piece of what i mentioned in terms of the pay to delay, immediately that follows the generic drug peace because $3 billion, we could apply to some other effort including reducing the deficit rather than taking of the money from food safety modernization or from sectors, or dealing with some of the other areas that we do and those of the places we should start rather than putting at risk the health and safety of the people in this country. if i could quickly doing modernization peace because it is hard to stay away from this

area. the legislation called for the inspection of high risk food facilities every five years dropping to a frequency of every three years. these plans would be expected every seven years and dropped to once every five years. based on information you currently have how many facilities would fall into the high risk category and how many would fall into the low risk category? in order to meet the mandate how much more funding with the fda need to reach those inspection frequencies and how many more inspectors would you need to hire? >> i should thank you for your leadership in food safety over the years. has been most appreciated. in terms of your question, mike taylor says 8,000 in the high risk category in 2012.

[inaudible] -- [talking over each other] a [inaudible] >> risk category? >> a total of 15,000 -- [inaudible] >> closer to higher risk. >> any comments about knowing what we are able to do or not able to do when you look at high risk 8,000? not a small number for us to have not the tools that you need in order to get the job done. >> mention of inspections done by state, the point i made earlier, another casualty of the

cuts in h.r. 1 would be the opportunity to support state and local partners and the ability to strengthen those that would be so important to an integrated food safety program. >> thank you. margaret hamburg, i want to talk about the interagency, the tentative proposals that came out in december. we have a comment period and federal trade commission and center for disease control, usda and you. it is something that concerns me. the potential of reach based on these guidelines that are sitting on the table right now and having a comment period.

under these guidelines, the food that would not be allowed to be advertised on television shows in which 50% of the audience is children could include peanut butter sandwiches, eggs, granola bars, chocolate milk, pretzels, cheerios, gramm crackers and cheese. i can see you squirming. i will go on. raised in grand, vegetable soup, yogurt, some salad dressing, and natural cheese. what bothers me is -- the television shows that teenagers

watch, college football, fresh prince of bel-air, full house, jane goodall's heroes, nascar progress middle the only thing i progress middle the only thing i can keep up with. comedy central, sports center, usa soccer. these items would not be allowed to advertise. doesn't that strike you as an overage? particularly since these items are allowed to be sold? >> i think that the effort is geared at trying to make sure there's an opportunity for information on products to be as a spurate and informative as possible and certain products that are targeted to huge

audience in particular often are targeted in way is that are misleading in terms of their nutritional value and the appeal of the sugary sweetened sugar -- >> nanny state has a solution to everything. good old momma government is here to tell you how to raise your kids. i might want to serve a bologna sandwiches. these peanuts which the committee routinely enjoy eating, two packages with eggs see your guidelines and not be able to advertise because of the salt. i am going to invite you to speak because it is like a referee in the back. you can see them from here. what is the nanny state one? let's talk about healthy kids.

are you familiar with the family friendly mtv show called skins? >> i am not. >> it is not something you want your 14-year-old necessarily watchinuti and yet you could watch skins a soft porn titillating type show. i haven't watched ieca i have channel surf through it, but you could watch that show, but you could not buy cheerios that would be allowed to advertise on. doesn't that strike you as even for mama government a little bit inconsistent? >> from the fda perspective our role is to try to provide accurate information to consumers so they can make informed choices, hopefully

informed choices. [talking over each other] >> it is very important to provide that io tormation so tht people can see what is in their food. >> you want it so when i take my wife out for a romantic 3 nlentingeas day dinner we have to read through the content of the food before we order fish and stake. i won't let you steal my romantic evening from me. i dowed tll'nodlywhere the nann state is planning to stop. if you look at the review of the wihow's skin and you watch freedom of speech, i am not looking skins but it is ironic, you can watch skins. that might hurt our teenagers not that i will run around

naughty little thin[laughter] if i have not drawn up a little advertising and interest in the show -- >> we have to run because we have to call for votes. i think we are going to go into what is advertised in television, let us go after prescription drugs that are driving the airwaves. by the time they get to the disclaimers they are going to tell you you are they seem to be very effective in -- it is over load. i am really concerned getting back to the border if you would get me some information on the number of tests conducted on microbials and pesticides for fresh produce at the bottle.

the time it has taken for the agency to return the results of those tests. are want to know about riding coat resources to quickly report the results of the test. this is where speed is essential. if there are any gaps in providing that speed, would like to know about them. and read something and get that on the record in writing. i am not looking for the answer. on the issue regarding import procedures for issuing release notices for cocoa beans, it has come to my attention that according to the cocoa processing industry chasing time delays, financial burden at u.s.

ports. it is not a processing facility. i don't even know all of facts i submit to you. >> i am not up to speed on cocoa bean imports. we will get back to you with information and on another very important -- i would just add what you said about time being essential with the testing going into that, huge opportunities to apply better science so we can have better on-site diagnostics to give answers quickly and be able to use products more swiftly which matters to companies and matters to the quality of the produce and it matters to people who want those foods plants on their plate. >> as we move from a fast-food society to this low food fresh food we have to be extra fat -- extra fast, what we claim it to

be. >> the very distinguished democrat card that you took out our timekeeper on the television. you might have another 2 minutes. >> i am finished. >> we appreciate it. we have to run. we have a lot of questions for the record but i do want to say you are extremely important agency to every single household in america and we'll take a lot of pride in your work and we all have opinions of what you are doing right and what you're doing wrong and we want to work through this process with you and we appreciate what you are doing and while the hearings end our discussions won't. this committee stands adjourned.

[inaudible conversations] [inaudible conversations] >> live pictures from the council on foreign relations. former federal reserve chairman alan greenspan says government activism is slowing the economic recovery. his comments are in a paper he wrote on the council on foreign relations and we bring live coverage as he explains his conclusions this morning and answers questions from the audience. alan greenspan was head of the federal reserve until 2006.

live coverage on c-span2. we expect to get underway shortly. [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> good morning, everyone. welcome to the council and welcome to this morning's breakfast. we are very fortunate to have as our guest alan greenspan. there are few people who need no introduction less than alan needs no introduction but i would like to say it is a privilege for me. we have been friends for a long time. i am a big admirer of his. i am particularly pleased to be here with you this morning. you all know his extraordinary record of public service both in

the executive branch and the federal reserve. and the extraordinary record of intellectual contribution he has made to the country. and other contributions. let me remind you of the format this morning. first and foremost this discussion is on the record. eyewall also like to ask all of you to turn off your cellphones and blackberries and ipads and any other imaginable device you may be carrying. please turn them off not just on vibrate. we are going to begin with a discussion so to speak between allen and me and then we're going to open it up for questions from all of you.

we will close this meeting promptly at 9:3. i am going to base my questions on a very provocative article which allen has just written and which i think a number of view have seen. it is right here. the title of the article is activism, as in the enormous state of activism we saw at the federal level following the credit market collapse and the onset of the great recession ended is a very provocative piece because in effect, feel free to challenge me on this. it is a critique of that

activism. i have a series of questions and let me start with this one. the thrust of this is capital expenditures as a share of corporate cash flow are lower than at any point since 1940. and of course there's a big cost to the from the point of view of productivity and jobs and income and so forth. a negative reaction, among business or in the business world. through the activism as you call

it which follows the credit market collapse but what particularly struck me about that observation was that it implies that the, quote, benefits of the activism, the stimulus program, they have been upset almost entirely or more than entirely by economic cost of this weakness. so this was in effective. i ask if you agree with that characterization or take me on in terms of my interpretation. >> the interpretation is correct. what i have endeavored to do is examine what struck me from the

beginning, be tepid recovery, and the post union bancorp the crash. it shows up most particularly in the structure of the gdp. most people look at the gdp with an added note of astonishment which is what it is. what they rarely ever do is try to put a life expectancy on each of those elements in the gdp because when you do that you see something very interesting in the coming period. namely that all of the loss in economic activity which engendered this huge rise in unemployment is attributable to expenditures on assets with life expectancy is of greater than 20

years. it is residential in part but since the 2008 crash it has been predominantly nonresidential. what we are seeing is even though there is reasonably good recovery in equipment and software, restructure of the investment is dead in the water. showing signs of coming back effectively. the reason this is important is it points out that if you have -- 1 percentage point annual rate change greater than private/domestic gdp excluding of those three years and with

it. in a sense if the gdp excludes these long-term assets into the overall gdp and convert that to the unemployment rate. with this extraordinary opening up of the gap since 2007 that will count for pre much of the rise in unemployment, close to 5% to 9% to 10% so the issue is what is causing that? what i hh are most

heavily discounted. going through assets. it is not to the cash flow and put into securities at one point or another. both securities markets, there is no effective long-term period. everything is -- you can sell in three minutes. and in a limited way you can't a

so -- the rates of return are unusually quite significant. they are obtained so over the life of the assets. what i would call -- basic way in which corp. made its decision of choosing what proportion of the liquid cash flow they would need. you can look at the expected life -- expected rate of return on the new asset, most likely expected rate of return. but then a simulation of different points to get a distributional of those rates of return hand if you have to invest assets which are irredeemable making a critical choice you have to have

something of that you know what structure will look like. you can look at utility plans that haven't major problems because i don't know what they're called. that is causing them to pull back, move towards a shorter time tied with assets in order to -- in general what this tells me is if we have had any disgraces, collapse in the ratio of capital investment to cashflow, you have to remember corporations are choosing to meet that allocation. what is unambiguous is the fact as you point out in the peace,

kerri fees cash flow analyses back into the 1930s. it is remarkably characteristic, they look very much like they did back then. bandar don't think it is an accident but i do recognize the statistical proof that there is very much similar feel of what government will do and goes through a little bit of what went on in the 30s. in the recovery act, basically dictated everything that was marked down by the supreme court. that is an extreme form of activism. zero activism -- in the sense that i will be fine it, pure laizzez-faire has never existed in any society but it is an

issue of relevance and the reason why you have activism has of problem is that it increases the number of variables the corporation must deal with. in a statistical sense it spreads out the very ends of the distribution of expected rates of return. just as important or maybe even more so is the evidence also suggests that both risks, well underestimate potential rate of return, but the evidence also suggests, and it is the tale risk -- >> let me press the point. if as you said a moment ago this gap between historical -- the

historical relationship of long lived corporate fixed investment and cash flow that we are now seeing, if that account for the entire rise in unemployment and if the primary reason for the gap as the paper says it is business of version to this activism and the implication is if we hadn't had the activism labor market conditions would be better -- >> that is the conclusion but it has to be proved. my concern about that is what business men say is not all that unusual. [talking over each other] [laughter] >> the basic issue is what they do. this ratio of capital

investment, capital appropriations which is the more appropriate statistic, a share cash flow not saying that they believe the say in what they believe, not what is creating this pulling back of the average expectancy of the gdp. ipod the actual average expectancy. it is down for a number of years as the rate of appropriation growth. we have known that the growing population, of all sorts, very gradually and threw 1892 and

flattens out. what is unqualified is essentially showing the hole in the economy. it is a question of proof that the activism which is the major cause. what we try to is a take the actual ratio of capital investment to cash flow. it is even true in households. you can see it pull back which is quite significant. if you basically put these together the turtle what you find is you are asking of the question why is business -- why are households doing this?

what do we start doing in the most press a -- surprising point of the paper is the fact that approximately a fifth of the shortfall of capital investment is attributable to crowding out. generally agreed upon proposition, large federal deficits crowd out private investment and the statistics are in the short run. the point here is it doesn't come as a surprise. if you aggregate savings investment imbalances of households, business, state and

local governments, remember savings investment for the globe as a whole has got to be equal. the difference in each country is a perfect balance. you setup a series of relationships in which you see the difference in investment by sector, by households or federal government and corporations and others. what you find is a very sharp rise, adjustment deficits. pat accounts for a significant part of the shortfall with capital investment and you go to metrics, the ones that are very

robust. and get that result, came upon it by accident. it works even better in the united kingdom. it was worked as a general proposition, and readily available. we have plot few observations here. the deficit is a percentage of gdp. it doesn't show up, a particular impact on private investment. it is easing equations that take a part of it.

they desegregated the stimulus program. how close the issue of shortfall and capital investment. this was the official data, deficits -- approximately the same. what is important is a balance funds including the current account balance. a number of different ways, what i would say is an unequivocal results. the stimulus program which is a gross statistic, at least an

offset, also an additional important issues here. about a quarter, needs to be attributed to the normal adjustment of capital investment business conditions. it distracted from cyclical adjustment aspects. it is difficult to judge words coming from -- sheer uncertainty because observe what happens, take the position which essentially is what we are doing and unless the government comes in and keeps pushing it won't end by itself. my sense is what we need to do is to calm down.

indeed, activism was quite significant. the cash flow started to back up. i connected that statement to penetrate cause and effect. >> you can see why this is provocative. the implication is had we not had a stimulus and had we not had for that reason and certain others the surge in fiscal deficits, growth, and jobs would have been better. that is a very important question. i want to ask about lending. there is an analysis point about witnesses in the -- my reading

of implies dodd frank and certain other aspect of the regulatory -- suppressed lending. it is harmful to recovery. >> i don't think it has very significant -- remember the dodd frank is not scheduled to be implemented by the regulatory agencies until july. extraordinary amount of regulatory rooms required in the dodd frank is swamping the regulatory agency. if we had -- they require

adjudication a couple of hundred required the down trend. one of the problems i have with the dodd frank bill is that there is implicit conceptual structure of how markets work. i think frankly is it is rather simplistic and doesn't really capture the complexity of what indeed is currently going on in the marketplace. there has been a major move towards regulating the financial system and effectively to arbuckle -- alter the metrics. what was going on was

whatt cf1 op an asset backed security. aha the fact that they're subject, car we learned a lot,

the issue of to the commission which effectively provisioned dodd frank and won't. we saw something in fixing fees that there was a wonderful day when mastercard stock prices collapsed. what caused it? the implementation of dodd frank, allocations of humans between those -- basically the debit card fees. and what struck me about it is the legislations requires a sharp reduction in those going to banks, preliminary judgment was -- preliminary ruling was

even stronger than the market had expected. the fed got flooded with all sorts of arguments. i don't know how that will come out. i do know this is the tip of the iceberg. the way to see it, failure to understand secondary consequences of what we are going to do. and remember that one of the aspects to respond to your question, one of the aspects of the process of determining capital investment is what type of finances are available. how refinancing goes on and so it is not a simple one shot deal. to the extent that there is

uncertainty, it raises issues which would affect the capital investment to cash flow ratio. by how much i have no way of measuring. the fact that it does in my experience over the years, it is significant but not critically important to the investment process as much as the financial system. we still have a number of things in play. what is fairly clear at this stage is is comeing to the bottom line, to not directly show the stimulus program in a new light as calculated is not -- but i can't demonstrate the estimates which i want to do and see the role